The South Indian Sugar Mills Association of India - Tamil Nadu is disappointed that the State Budget has not addressed the concerns of the sugar industry.

The Association president Palani G Periasamy said that while the Government has provided VAT concessions to a range of commodities and eased interstate sales procedures to enhance competitiveness of local industry, the sugar industry has been completely ignored.

The sugar industry in Tamil Nadu had hoped that the 5 per cent VAT levied on sugar last year would be waived as it makes local production unviable as compared with mills in neighbouring States.

Sugar prices have hit an all time low of Rs 2300 a quintal and mills are losing about Rs 900 on every quintal of sugar produced. Sugar from neighbouring states is pouring into Tamil Nadu as they are cheaper without VAT. Tamil Nadu mills have also lost their traditional market in Kerala as other States such as Karnataka have taken over the market.

Also while Tamil Nadu has done away with generation tax for biomass based power plants it has unfairly excluded bagasse based power plants from this concession.

Also the ethanol-blended fuel programme has not taken off as the government has not allowed production of ethanol. Investments of hundreds of crore of rupees in ethanol plants are idling, he said.

Under the adverse conditions cash strapped sugar mills will not be able to pay farmers the sugarcane price and arrears will mount, Periasamy said. The government has to come out with supportive measures, he added.